Google goes back to ad-supported model for its YouTube Originals

Google seems to come a cropper when it comes to its YouTube content ambitions, announcing all of its Original content will now be available for ‘free’.

As part of the evolution of YouTube, Google attempted something which could have been viewed as quite drastic; it introduced a paywall. For $11.99 a month, users could access ad-free content, Google’s library of music and also its Original content. For a platform which has a reputation for free content, it was a strategy which flew in the face of logic.

However, it would appear this strategy has been less than successful. This is not to say it is dead, but more work needs to be done on the foundations before the palace can be built. Starting at some point this year, YouTube Original content will be available for ‘free’, with adverts, on the YouTube platform for all to view.

“Today, we announced that all new YouTube Original series and specials will soon be available for fans around the world to watch for free with ads — just like they enjoy other content on the platform,” YouTube said in a blog entry.

The paywall business model might be attractive in the long-run, but Google is still a business with investors; it has to make money now as well.

“Presumably YouTube’s gargantuan global audience means its more lucrative to use advertising rather than subs to monetise those shows [YouTube Originals],” said Ed Barton, Chief Analyst at Ovum.

“YouTube has huge audiences in many countries which don’t have much propensity to subscribe to online video services so focusing on advertising presumably unlocks a lot of value in those markets.”

Perhaps this is what we should take away from this move; Google tried to do something new, it didn’t reap the rewards, and now the team is going back to the tried and tested ad-supported model. It was too much self-disruption to stomach is a single sitting.

The content conundrum

Despite content being one of the biggest discussions in the tech world over the last few years, the question of how to make money still remains.

On one side of the fence, you have the paywall business model. There are numerous benefits here, recurring revenues and brand stickiness being the most obvious, though it does also create a sense of authority in the field. This premium perception will be attractive to the content creators, and it does also simplify the process of paying the creators themselves.

However, a paywall does make it more difficult to scale viewing figures and does mean you have to justify the cost to consumers. Dud content is punishable through the trials of social media meaning more attention (and money) much be spent on creating original content.

Looking at the ad-supported model, the practice which drove Google to the behemoth it is today, content is much more accessible and simpler to scale. You also have the advantage of not being punished for suspect-quality content as consumers are being entertained for ‘free’.

But there is also the downside, which mirrors the paywall approach almost perfectly. Content creators will be afraid of de-valuing their work, while there is also the complicated matter of getting paid. Consumers are not necessarily guaranteed to come back, and when you have created a reputation for a free-content provider, shifting users towards premium products becomes much more difficult.

Google’s long-term ambitions

The ad-supported business model has fuelled Google’s growth over the last decade, though it would be stupid to ignore the trends which are in the market.

“Google and YouTube should certainly have an eye on over-arching trends in the content space,” said Paolo Pescatore of PP Foresight.

“Traditional content creators are gradually moving towards the world of OTT, and YouTube is the most popular streaming platform on the planet. It has to figure out how to change its perception in the eyes of the consumer, ushering the masses behind the paywall.”

As Pescatore points out, consumers view YouTube as a platform for free content. This engrained perception will present challenges in driving adoption of the premium products, however offering the Original programming for free might work as somewhat of a teaser to justify the expense of a subscription.

YouTube is a platform which can survive by solely focusing on the ad-supported model, however it will be leaving money on the table. Premium streaming services are certainly gaining more traction, creating more value throughout the entire digital ecosystem. Why would Google want to ignore this potential boost to revenues?

Diversification is key for every business, not just the ones who are under financial pressures. Google has consistently shown it is an organization which consistently strives for the new and is not afraid of setbacks.

The movement towards a paywall on the YouTube platform might not have worked for the moment, but there are simply too many gains to ignore. Releasing YouTube Originals as free content might be a smart way to alter the perception of YouTube, demonstrating the value of what is behind the paywall to consumers, and also proving content creators their pride and joy would not be devalued on the platform.

For the moment, Google executives seem to have decided that there is more money in ad-supported revenues than the paywall for YouTube Originals. This might not help long-term ambitions of making the paywall model work, but perhaps it was too much of a drastic step away from the traditional Google business model.

This is a minor set-back, but the YouTube paywall is far from destroyed.

YouTube censorship contributes to disappointing Google numbers

Google holding company Alphabet saw its share price fall by 8% after it announced disappointing Q1 numbers.

The company was fairly elusive about the reasons for a deceleration in its revenue growth on the subsequent revenue call, but many commentators picked up on comments around YouTube as significant.

“YouTube’s top priority is responsibility,” said Google CEO Sundar Pichai. “As one example, earlier this year YouTube announced changes that reduce recommendations of content that comes close to violating our guidelines or that misinforms in harmful ways.”

“…while YouTube Clicks continue to grow at a substantial pace in the first quarter, the rate of YouTube Click growth decelerated versus what was a strong Q1 last year reflecting changes that we made in early 2018, which we believe are overall additive to the user and advertiser experience,” said CFO Ruth Porat.

At least one analyst on the call expressed frustration at the lack of further clarity on the reasons why Google’s revenues aren’t what they expected them to be, but the YouTube stuff seems fairly self-explanatory. Pichai made it clear that YouTube is all about reducing perceived harmful content on the platform, while Porat referred to changes made at YouTube in early 2018.

So what were those changes? To YouTubers they were one of many wholesale restrictions on the types of content that are monetised (i.e. have ads served on them), broadly referred to as ‘adpocalypse’. Every now and then a big brand found its ads served against content it disapproved of, resulting in it pulling its ads from YouTube entirely. In the resulting commercial panic YouTube moved to demonetize broad swathes of content.

While this is an understandable immediate reaction to a clear business threat, it also undermines the central concept of YouTube, which is to provide a platform for anyone to publish video. On top of that YouTube increasingly censors its platform, including closing comments, tweaking the recommendation algorithm and sometimes even banning entire channels. These restrictions must surely have contributed to the amount of ad revenue coming in, but Google seems to have decided it’s worth it to keep the big brands sweet.

Here’s some further analysis from prominent YouTuber Tim Pool followed by an example of just the kind of indie creativity YouTube has built its success on (which, to be fair, doesn’t seem to have been demonetised this time). A move towards favouring big corporates over independent producers is a much bigger risk than you might imagine for YouTube, as Google’s disappointing Q1 numbers imply.

 

The politics of technology

The latest mutiny at Google illustrates what a political game technology has become and it’s only going to get more so.

Last week Google announced the creation of ‘An external advisory council to help advance the responsible development of AI.’ In so doing Google was acknowledging a universal concern about the ethics of artificial intelligence, automation, social media and technology in general. It also seemed to be conceding that the answers to these concerns need to be universal too.

The Silicon Valley tech giants are frequently accused of having a political bias in their thinking that is hostile to conservative perspectives. Normally this wouldn’t matter, but since the likes of Google, Facebook and Twitter have so much control over how everyone gets their information and opinion, any possible bias in the way they do so becomes a matter of public concern.

In an apparent attempt to demonstrate diversity of viewpoints in this new Advanced Technology External Advisory Council (ATEAC), Google included Kay Coles James, who it describes as ‘a public policy expert with extensive experience working at the local, state and federal levels of government. She’s currently President of The Heritage Foundation, focusing on free enterprise, limited government, individual freedom and national defense.’

This decision has upset over a thousand Google employees, however, who made their feelings publicly known yesterday via a an article titled Googlers Against Transphobia and Hate. The piece accuses James of being ‘anti-trans, anti-LGBTQ, and anti-immigrant’ and linked to three recent tweets of hers as evidence.

Beyond those tweets it’s hard to fully test the veracity of those allegations, but it does seem clear that they are largely political. The Equality Act is a piece of US legislation currently being debated in the US House of Representatives, sponsored almost entirely by members of the Democrat Party. The legal status of transsexual people is intrinsically political, as is immigration policy, and attitudes towards them tend to be similarly polarised.

The Googlers Against Transphobia certainly seem to fall into that category, but what makes them noteworthy, apart from their numbers, is that they expect their employer to adhere to their political positions. Google has attempted to defend the appointment of James to one of the eight ATEAC positions by stressing the importance of diversity of thought.

Here’s what the Google dissidents think of that argument. “This is a weaponization of the language of diversity,” they wrote. “By appointing James to the ATEAC, Google elevates and endorses her views, implying that hers is a valid perspective worthy of inclusion in its decision making. This is unacceptable.”

This is just the latest internal insurrection Google has faced from its passionately political workforce. Every time a story emerges about Google working on a special search engine for China there is considerable disquiet among the rank and file, ironically opposed to censorship in this case. And then there was the case of James Damore, sacked by Google for trying to start an internal conversation about gender diversity at the company.

Google’s struggles pale when compared to those of Facebook, however. Every time it seems to have just about recovered from the last crisis it finds itself in a new one. The latest was catalysed by the atrocity committed in New Zealand, in which a gunman killed 50 people praying in two mosques in Christchurch and live-streamed himself on Facebook.

Understandably questions were immediately asked about how Facebook could have allowed that streaming to happen. While it acted quickly to ensure the video and any copies of it were taken down, Facebook was under massive pressure to implement measures to ensure such a thing couldn’t happen again. Its response has been to announce ‘a ban on praise, support and representation of white nationalism and white separatism on Facebook and Instagram.’

These kinds of ideologies are largely rejected by mainstream society for many good reasons, but ideologies they remain. Facebook is also moving against claimed ‘anti-vaxxers’, i.e. people who fear the side-effects of vaccines. They may well be misguided in this fear but it is nonetheless an opinion and, so far, as legal one.

Finding itself under pressure to police ideologies and opinions on its platforms, Facebook seems to have realised this is an impossible task. For every ‘unacceptable’ position it acts against there are thousands waiting in the wings and an obvious extrapolation reveals a future Facebook in which very few points of view are permitted. In apparent acknowledgment of that dilemma Facebook recently called on governments to make a call on censorship, but it should be careful what it wishes for.

Another type of content facing increasing calls for censorship is claimed ‘conspiracy theories, with a recent leak revealing how Facebook agonises over such decisions. Google-owned Facebook is also acting against such content, but seems to prefer sanctions short of outright banning, such as the recent removal of videos published by activist Tommy Robinson from all search results.

Again this puts technology companies in the position of censors of content that often has a political nature. How do you define a conspiracy theory anyway and should all of them be censored? Should, for example, the MSNBC network in the US be sanctioned for aggressively pursuing a narrative of President Trump colluding with Russia to win his general election when a two-year investigation has revealed it to be false? Is that not a conspiracy theory too? Politics and technology collide once more.

The current era of political interference in internet platforms was probably started by the Cambridge Analytica and subsequent allegations that the democratic process had been corrupted. As technology increasingly determines how we view and interact with the world this problem is only going to get bigger and it’s hard to see how technology companies can possibly please all of the people all of the time.

Which brings us back to the start of this piece: AI. The only hope internet they have of monitoring the billions of interactions they host per day is through AI-driven automation. But even that has to be programmed by people with their own personal views and ethics and will need to be responsive to public sentiment as it in turn reacts to events.

As the US President has done so much to demonstrate, technology platforms are now the places much of politics and public discussion take place. At the same time they’re owned by commercial organizations with no legal requirement to serve the public. They have to balance pressure from both professional politicians and the politics of their own employees with the dangers of alienating their users if they’re seen to be biased. Something’s got to give.

This dilemma was illustrated well in a recent Joe Rogan podcast featuring Twitter, which you can see below. In it Twitter CEO Jack Dorsey and his head of content moderation Vijaya Gadde defend themselves from accusations of bias from independent journalist Tim Pool.

 

Social media censorship continues to escalate

In recent days another round of restrictions have been imposed across YouTube and Facebook, with social media companies increasingly being used as proxies in a culture war.

Most recently YouTube announced several new measures related to the safety of minors on YouTube. The main driver seems to be the comments people post on videos, which anyone who uses YouTube knows often range from unsavoury to downright deranged. The specific issue regards those comments on videos that feature minors, so YouTube has disabled all comments on tens of millions of such videos.

On top of that millions of existing comments have been deleted, and a bunch of channels judged to have produced content that could be harmful to minors have been banned, which indicates this is not a new issue. YouTube tends to take its most strident action when its advertising revenues are threatened and a recent exposé on this topic prompted major advertisers, including AT&T, to cancel their deals, hence this announcement.

While YouTube has always been quick to protect its ad revenues, it has historically been less keen to censor comments or ban creators outright, so this definitely marks an escalation. The same can’t be said for Facebook, which seems to be the major platform most inclined to censor at the first sign of trouble. An endless stream of scandals over the past year or two have taken their toll on the company, whichis now in a constant state of fire-fighting.

Facebook’s most recent piece of censorship concerns Tommy Robinson, a controversial UK public figure who concerns himself largely with investigating the negative effects of mass immigration. He recently published a documentary criticising the BBC on YouTube, and presumably promoted it via Facebook and Facebook-owned Instragram, because the latter two platforms decided that was enough to earn him a permanent ban.

 

In a press release entitled ‘Removing Tommy Robinson’s Page and Profile for Violating Our Community Standards’, published the day after Robinson released his video, Facebook explained that he had repeatedly violated its Ts and Cs by indulging in ill-defined activities such a ‘organised hate’. This seems to be a neologism for some kind of rabble-rousing combined with perceived bigotry.

“This is not a decision we take lightly, but individuals and organizations that attack others on the basis of who they are have no place on Facebook or Instagram,” concludes the press release. This sets an interesting precedent for Facebook as a significant proportion of the content generally found on social media seems to match that description. As is so often the case with any censorship decision, one is left wondering why some people are punished and others aren’t, as YouTuber Argon of Akkad, recently kicked off micro-payments platform Patreon, explores below.

 

There is a growing body of research that points to many of these decisions having a political or cultural bias. Quillette, an independent site that publishes analytical essays and research, recently ran with a series entitled ‘Who controls the platform’, which culminated in a piece headlined ‘It Isn’t Your Imagination: Twitter Treats Conservatives More Harshly Than Liberals’.

The piece detailed some statistical analysis undertaken by the author to see if there is any solid evidence of bias. Using stated preference for a candidate in the 2016 US presidential election, it was concluded that Trump supporters are four times more likely to be banned that Clinton ones. The piece also highlights some examples of apparently clear braking of Twitter’s rules that nonetheless went unpunished, once more calling into question the consistency of these censorship decisions.

Investigative group Project Veritas, which had previously claimed to have uncovered evidence of ‘shadowbanning’ – i.e. making content from certain accounts harder to find without banning them entirely – has now moved on to Facebook. From apparently the same inside source comes the allegation that Facebook indulges in ‘deboosting’, which seems to amount to much the same thing. You can watch an analysis of this latest report from independent journalist Tim Pool below.

 

Nick Monroe, another independent journalist whose preferred platform is Twitter, recently reported that “A UK group called Resisting Hate is trying to target my twitter account.” Resisting Hate apparently compiles lists of people it thinks should be banned from various platforms and then coordinates its members to send complaints to the platforms about them.

 

It seems likely that this mechanism is a major contributing factor to any imbalance in the censoring process. All social media platforms will have algorithms that identify certain stigmatised words and phrases and automatically censor content that contains them, but as even the UK police have shown, that is a very crude without the ability to understand context. They therefore rely heavily on their reporting mechanisms, a process that intrinsically open to abuse by groups with a clear agenda.

And it looks like calls for censorship are starting to spread beyond just single-issue activist groups into the mainstream media – the one set of people you would previously have imagined would be most opposed to censorship. Tim Pool, once more, flags up a piece published by tech site Wired that, quite rightly, flags up the inconsistency of the censorship process, but then takes the step of calling out some other ‘far right activists’ it thinks Facebook should ban while it’s at it.  

Twitter CEO Jack Dorsey recently did the interview rounds, including with several independent podcasters. While he was generally viewed as being a bit too evasive, he did concede that a censorship process which relies heavily on third party is flawed and open to abuse. The problem is there is now so much commercial, regulatory and political scrutiny on the big social media platforms that they have to be seen to act when ‘problematic’ content is flagged up.

You don’t need to spend much time on social media to realise that it’s the battle ground for a culture war between those in favour of (selective) censorship and those who want speech to be as free as possible. There is unlikely to ever be a clear winner, but there is little evidence that censorship ever achieves the outcomes it claims to desire: protecting people from harm.

Nobody is forced to consume any content they don’t like and censorship never changes anyone’s mind – it just drives speech and ideas underground and, if anything, entrenches the positions of those who hold them. To sign off we must give a nod to the hugely popular podcaster Joe Rogan, who recently conducted a 4-5 hour live stream with Alex Jones, a polarising figure that has been kicked off pretty much every platform. You can watch it below or not – it’s your choice.

 

Google investors slightly spooked by free-spending execs

Revenues might well be booming again at Google, but it seems shareholders are slightly concerned by increased costs, which is one of the fastest growing columns in the spreadsheet.

Looking at the final quarter, revenues stood at $39.3 billion, up 22% year-on-year, though traffic acquisition costs (TAC), what Google pays to make sure it is the dominant search engine across all platforms, operating systems and devices, were up by over $1 billion. Cost-per-click on Google properties were also down. A glimmering ray of sunshine was higher-than-expected seasonal growth for premium YouTube products and services.

Total revenues for 12 months ending December 31 stood at $136.8 billion, up 23% over 2017, while net income was back up to the levels which one would expect at Google, raking in $30.7 billion. The company is not growing as quickly as it used to, while expenses are starting to stack up. Investors clearly aren’t the happiest of bunnies as share price declined 3.1% in overnight trading.

“Operating expenses were $13.2 billion, up 27% year-over-year,” said Alphabet CFO Ruth Porat. “The biggest increase was in R&D expenses, with the larger driver being headcount growth, followed by the accrual of compensation expenses to reflect increases in the valuation of equity in certain Other Bets.

“Growth in Sales and marketing expenses reflect increases in sales and marketing headcount primarily for Cloud and Ads followed by advertising investments mainly in Search and the Assistant.”

Headcount by the end of the last period was up by more than 18,000 employees to 98,771. While CEO Sundar Pichai was keen to point out the business is continuing to invest in improving its core search product, diversification efforts into areas such as the smart speaker market, cloud and artificial intelligence are hitting home. Perhaps investors have forgotten what it’s like to search for the next big idea.

For years, Google plundering the bank accounts with little profit to offer. These days are a long-distant memory, but it is the same for every business which is targeting astronomical growth. You have to perfect the product and then scale. A dip in share price perhaps indicates shareholders have forgotten this concept, but Google is doing the right thing for everyone involved.

Some businesses search for differentiation and diversification when they have to, some do it because they have ambition to remain on top. Those who are searching because they have to are most likely reporting static or declining numbers each month and did not have the vision to see the good days would not last forever. Google is pumping cash into the next idea so when growth in its core business starts to flatten, something else can pick up the slack and pull the business towards more astronomical growth.

This is what is so remarkable about the ‘other bets’ column on the spreadsheets. It might have costs growth every single year, as does the wider R&D column, but having graduated the cloud computing business and most recently Loon, there are businesses which will start to contribute more than they are detracting. This is a company which never sits still, and this is why it is one of the most admired organizations from an entrepreneurial perspective. Shareholders might do well remembering this every now and then.

Looking at joy around the world for the final quarter, US revenues were $18.7 billion, up 21% year-over-year, while EMEA brought in $12.4 billion, up 20% and APAC accounted for $6.1 billion, up 29%. Revenues in LATAM were $2.2 billion, up 16% year-over-year. APAC and LATAM were subject to negative FX fluctuations, particularly in Australia, Brazil and Argentina.

In the specific business units, Google Sites revenues were $27 billion in the quarter, up 22%, with mobile collecting the lion’s share, though YouTube and Desktop contributing growth also. Cloud, Hardware and Play drove the growth in the ‘other’ revenues for Google, collecting $6.5 billion, up 31% year-over-year for the final quarter.

Although these diversification efforts are growing positively, there are also some risks to bear in mind. Firstly, the cloud computing business is losing pace with Microsoft and AWS. Google is making investments to attempt to buy its way through the chasm, but it will be tough going as both these businesses make positive steps forward also.

Secondly, some properties and developers are choosing to circumnavigate the Google Play Store, instead taking their titles direct to the consumer. This is only a minor segment of the pie for the moment and there will be a very small proportion of the total who actually have the footprint to do this (Fortnite for example), though it is a trend the team will want to keep an eye on. Perhaps the 30% commission Google charges developers will be reconsidered to stem dissenting ideas.

Finally, the data sharing economy which will sit behind the smart speaker and smart home ecosystem is facing a possible threat. Google will not make the desired billions from hardware sales, but it will from the operating systems and virtual assistant powering the devices. Collecting referral fees and connecting buyers with sellers is what Google does very well, though this business model might be under threat from new data protection and privacy regulations.

The final one is not just a challenge to the potential billions hidden between the cushions in the smart home’s virtual sofa, but the entire internet economy. GDPR complaints are currently being considered and potential consequences to how personal data is collected, processed and stored are already being considered. The Google lawyers will have to be on tip-top form to minimise the disruption to the business, and wider data sharing economy.

Costs might be up and while there are dark clouds on the horizon, Pichai and his executives are moving in the right direction. The lawyers can lesson the potential impact of regulation, but the exploration encouraged by the management team in the ‘other bets’ segment is what will fuel Google in the future. Costs should be controlled, but spending should also be encouraged.

British parents are increasingly worried about the Internet – Ofcom

Research into children’s media consumption published by UK telecoms regulator Ofcom revealed that only 54% of parents agreed the benefits of the internet outweighed its risks, the lowest level since 2011.

The report, “Children and parents: Media use and attitudes report 2018” (and its Annex) and “Life on the small screen: What children are watching and why” were made by Ofcom with analysis of 2,000 British children aged 3-15 years and their parents. Less than half of the parents of 3-4-years agreed that the internet is doing more good than bad.

When prompted with the major concerns parents have about their children’s online life, “companies collecting information about what their child is doing online” came the top with 50% of parents expressing concern. Three other issues have increased in their level of concern from the similar research a year ago: the child damaging their reputation (42% vs. 37%), the pressure on the child to spend money online (41% vs. 35%), and the possibility of the child being radicalised online (29% vs. 25%).

Ofcom 2019 1 parent concerns

Published by Ofcom today, the reports showed that on average, a 5-15-year old child would spend more than four hours a day in front screens, including 2 hours 11 minutes online (same as a year ago) and 1 hour 52 minutes watching TV on the TV sets (8 minutes shorter than 2017).

“Children have told us in their own words why online content captures most of their attention. These insights can help inform parents and policymakers as they consider the role of the internet in children’s lives,” said Yih-Choung Teh, Strategy and Research Group Director at Ofcom. “This research also sheds light on the challenge for UK broadcasters in competing for kids’ attention. But it’s clear that children today still value original TV programmes that reflect their lives, and those primetime TV moments which remain integral to family life.”

There are differences in media consumption patterns between age-groups and between social groups. For example, the older the age group, the more time the children would spend online, from less than nine hours per week for the 3-4-year olds to 20.5 hours for the 12-15-year olds. Or, children of the 3-4-year old group in C2DE households spend more time going online, playing games and watching TV on a TV set, compared to those in ABC1 households.

Ofcom 2019 2 weekly hours

When it comes to device ownership and the devices used for media consumption, the research found that 1% of 3-4-year olds already have their own smartphones, and 19% have their own tablets. The penetration rates go up to 83% and 50% respectively in the 12-15-year old group. Again, there are differences between sub-groups on the devices used to consume media on their devices. While TV sets are still being used by more than 90% of children across all the sub-groups, the percentage of them also watching TV on other devices increased from 30% in the 3-4-year olds to 62% in the 12-15-year group.

The penetration of streaming services including Netflix, Now TV, and Amazon Video is already fairly high among all the sub-groups, with 32% of 3-4-year olds using at least one of them, going up to 58% in the 12-15-year olds. But YouTube is still leading in popularity. 45% of 3-4-year olds have watched YouTube, the penetration would go up to 89% in the 12-15-year olds.

As well as content consumption, content creation is also on the rise among children, with “making a video” one of the most popular online activities. While on average 40% of 5-15-years have made an online video, nearly half of all 12-15-year olds have done so.

Ofcom 2019 3 making video

Time spent on online gaming has remained largely unchanged from a year ago, ranging from a little over 6 hours per week in the 3-4-year group to nearly 14 hours in the 12-15-year group. But gaming is the online activity that demonstrates the biggest gender disparity. While boys in all age groups spent more time on gaming than girls, the difference went up to over 7 hours in the 12-15-year olds. On average girls in this group spent 9 hours 18 minutes playing online games while boys of this age spent 16 hours 42 minutes.

Social networks are another important type of media consumption by children. Facebook remained to be the most popular social media among the 12-15 years group, but its downward trend has continued to the lowest level of 72% penetration since the high of 97% in 2011. Gaining popularity are Instagram (65%, up from 57% in 2017), Snapchat (62%, up from 58%), and WhatsApp (43%, up from 32%). More significantly, when asked to name their “main site or app”, equal number of 12-15-year olds (31%) named Facebook and Snapchat.

Ofcom 2019 4 social networks

Astoundingly, 1% of 3-4-year olds, 4% of 5-7-year olds, and 18% of 8-11-year olds already have social network accounts, despite that most social networks set their minimum age at 13. WhatsApp raised its minimum age for EU users to 16 prior to GDPR came into effect. At the same time, less than a third of parents were aware of Facebook’s age limit, with even less awareness for the age restrictions of Instagram and Snapchat.

Ofcom 2019 5 parent awareness

The app economy is going from strength to strength

The latest report published by App Annie showed mobile apps had their best year in 2018, and will get better in 2019.

In the report titled “The State of Mobile in 2019 – The Most Important Trends to Know”, the mobile apps analytics firm App Annie showed the latest data of the mobile apps industry, as well as their projections for the near future.

In short, the apps industry is doing rather well. “Consumers spent $101 billion on apps globally in 2018. This is larger than the global live and recorded music industry, double the size of the global sneaker market, and nearly three times the size of the oral care industry,” said Danielle Levitas, EVP, Global Marketing & Insights, App Annie. “Mobile experiences are so central to how we live, work and play and with consumers spending 3 hours a day on mobile, it’s clear how vital this platform is for all businesses in 2019 and beyond.”

Here is a snapshot of the highlights:

App Annie 2019 Snapshot

A few additional data points also caught our eyes:

  • Consumers on average spent 50% more time in mobile apps in 2018 than they did in 2016. Social and Communications apps made up 50% of total time spent globally in apps in 2018, followed by Video Players and Editors (15%) and Games (10%);
  • In Indonesia, mobile users spent over 4 hours a day in apps — 17% of users’ entire day. In mature markets like the US and Canada, the average user spent nearly 3 hours a day in mobile apps in 2018;
  • On average, consumers in the US, Australia, South Korea, and Japan have over 100 apps on their smartphones;
  • 74% of all consumer spending on mobile apps was on games;
  • YouTube accounted for 9 of every 10 minutes spent in the top 5 video streaming apps in 2018. It was also the number 1 app by time spent in video streaming apps for all markets except China;
  • The global consumer spending on dating apps grew by 190% from 2016 to 2018. Tinder successfully defended its number 1 position.

In terms competition between apps and between companies, three Facebook apps occupied the top three spots on the table of monthly active users. The same trio also took the top spots on the most downloads table, but Facebook Messenger edge Facebook to the top. Netflix netted the highest consumer spend on apps (followed by Tinder), while Sony’s Fate/Grand Order sat at the top of the games enjoying the highest consumer spend. Tencent on the hand, thanks to its strong line-up of apps and games, was the company that consumers spent the most on in 2018.

App Annie 2019 MAU

App Annie 2019 downloads

App Annie 2019 spend

The firm predicted that in 2019, the total consumer spending in app stores will double that of the global box office, to reach $120 billion. When it comes to media consumption, the firm sees in 2019 that 10 minutes of every hour spent consuming media across TV and internet will come from video streaming on mobile. Increased availability of premium content and service will also help.

Two years ago, we started hearing from some quarters of the industry that apps economy was dead. To read the latest data from App Annie, that pronouncement was gravely premature.

The Silicon Valley inquisition gathers pace

A number of independent online commentators have been blacklisted by technology giants for seemingly arbitrary reasons.

The past few weeks have seen another round of purging of content creators who rely on the internet for a living. The reasons for doing so are varied but usually default to some kind of transgression of their terms and conditions of use. However these Ts and Cs tend to be vaguely worded and appear to be selectively enforced, leading to fears that these decisions have been driven as much by subjective ideology as exceptional misbehaviour on the part of creators.

If there is an ideological bias it would appear to be against those commentators that are advocates of freedom of speech and unfettered dialogue. On the other side of the fence you have those who are concerned with concepts such as ‘hate speech’, which seek to ensure nothing that is deemed ‘offensive’ should be tolerated in the public domain.

Those latter terms are ill-defined and thus subject to a wide range of interpretation, which means rules that rely on them will, by definition, be subjectively enforced. In spite of that there is growing evidence that Silicon Valley companies are unanimous in their assessments of who should and shouldn’t be banned from all of their public platforms.

We have previously written about the coordinated banning of InfoWars from pretty much all internet publication channels and a subsequent purge of ‘inauthentic activity’ from social media. Now we can add commentator Gavin McInnes to the list of people apparently banned from all public internet platforms and, most worryingly of all, the removal of popular YouTuber Sargon of Akkad from micro-funding platform Patreon.

The internet, social media and especially YouTube have revolutionised the way in which regular punters get access to information, commentary and discussion. Free from the constraints imposed on broadcast TV, YouTubers have heralded a new era of on-demand, unfettered, user-generated content that has rapidly superseded TV as the viewing platform of choice.

Their primary source of income has traditionally been the core internet model: monetizing traffic via serving ads. But YouTube has been removing ads from any videos that have even the slightest chance of upsetting any of its advertisers for some time, forcing creators to call for direct funding from their audience to compensate.

The best-known micro-funding service is Patreon, which is where many YouTubers send their audience if they want to pay for their content. Any decision by Patreon to ban its users can therefore have massive implications for the career and income of the recipient of the ban. Sargon is thought to have had revenues from Patreon alone in excess of £100,000 per year, a revenue stream that has been unilaterally cut off without even a warning, it seems.

Every time an internet company moves against a popular internet figure there is inevitably outcry on both sides of the matter. Prominent advocates of free speech such as Jordan Peterson and Dave Rubin have tweeted their support for Sargon, while many media are actively celebrating the punishing or outright removal from the internet of people they don’t like.

The age-old debate concerning the optimal balance between safety and freedom is being won by those biased in favour of the former on the internet. The leaders of those companies are in a difficult position regarding censorship of their platforms but they seem to be basing their decisions on fear of the internet mob rather than rational, objective enforcement of universal rules. This isn’t a new phenomenon but it seems to be rapidly getting worse.

To finish here’s YouTuber and independent journalist Tim Pool giving his perspective while he still can.

 

The Children Act: US lawmakers asking to know how YouTube collects data on children

US Congressmen have demanded Google CEO answers questions on how YouTube tracks the data of minors.

Anyone who has been a parent to toddlers or pre-schoolers in the last dozen years must have felt, like it or not, YouTube has been a wonderful thing. It does not only provide occasional surrogate parenting but also delivers much genuine pleasure to the kids, from entertainment to education, with sheer silly laughter in between.

Meanwhile we have also recognised that YouTube can be a pain as much as a pleasure. The pre-roll and interstitial ads on such content are all clearly pushed at kids, in particular game and toy shopping; recommendations are based on what has been played therefore encouraging binge watching; not to mention the disturbing Peppa Pig or Micky Mouse spoof parodies that keep creeping through, a clear sign that, while you are watching YouTube, “YouTube is watching you”.

But neither the pleasure nor the pain should have been there in the first place, because, though not many of us have paid attention, “YouTube is not for children”, as the video service officially puts it. In its terms of service YouTube does require users to be 13 years and above. But, unlike Facebook, which would lock the user out unless he has an account, anyone can watch YouTube without the need of an account. An account is only needed when someone intends to upload a clip or make a comment. Even in situation like this, children can pretend to be above the age limit by inputting a faked date of birth, or simply by using someone else’s account. And YouTube has known that all along, it even teaches users how to make “family-friend videos”. Admit it or not, YouTube is for children.

Following complaints from 23 child and privacy advocacy groups to the Federal Trade Commission (FTC), two congressmen, David Cicilline (D) of Rhode Island, and Jeff Fortenberry (R) of Nebraska, sent a letter to Google’s CEO Sundar Pichai on September 17, demanding information on YouTube’s practices related to collection and usage of data of underaged users. The lawmakers invoked the Children’s Online Privacy Protection Act 1998 (COPPA), which forbids the collection, use or disclosure of children’s online data without explicit parental consent, and contrasted it with Google’s terms of service which give Google (and its subsidiaries) the permission to collect user data including geolocation, device ID, and phone number. The congressmen asked Google to address by October 17 eight questions, which are essentially related to:

  • What quantity and type of data YouTube has collected on children;
  • How YouTube determines if the user is a child, what safeguard measures are in place to prevent children from using the service;
  • How children’s content is tagged, and how this is used for targeted advertising;
  • How YouTube is positioning YouTube Kids, and why content for children is still retained on the main YouTube site after being ported to the Kids version

Google would not be the first one to fall foul of COPPA. In a recent high-profile case, FTC, which has the mandate to implement the law, fined the mobile advertising network inMobi close to $1 million for tracking users’, including children’s location information without consent.

This certainly is a headache that Google can do without. It has just been humiliated by the revelation that users’ location data was still being tracked after the feature had been turned off, not to mention the never-ending lawsuits in Europe and the US over its alleged anti-trust practices. It also, once again, highlights the privacy minefield the internet giants find themselves in.  Facebook is still being haunted by the Cambridge Analytica scandal, while Amazon’s staff were selling consumer data outright.

Nine years before COPPA came into force, an all-encompassing Children Act was passed in the UK in 1989. In one of its opening lines the Act states “the child’s welfare shall be the court’s paramount consideration.” This line was later quoted by the author Ian McEwan in his novel, titled simply “The Children Act” (which was recently made into a film of the same title). In that spirit we laud the congressmen for taking the action again YouTube’s profiteering behaviours. To borrow from McEwan, sometimes children should be protected from their pleasure and from themselves.

Ofcom ponders how to rid the internet of horridness

Nobody’s in favour of censorship but freedom comes at a price, right? This is essentially the premise for a new Ofcom discussion paper on online content.

Entitled ‘Addressing harmful online content’, the document has been published alongside some research specially commissioned into people’s concerns about online content. Its stated aim is to initiate a public conversation about this stuff but it gives the impression of trying to set the course of that debate in the direction of greater regulation and censorship.

The tension between security and freedom is as old as civilization and there are some standard techniques for persuading people to surrender their autonomy. A word currently in vogue is ‘harm’, which has the benefits of being emotive, universally disapproved of and yet broad enough to be subject to constant redefinition. If you can get people to agree that harm must be opposed then you can establish consensus on anything else so long as you position it in opposition to harm.

If harm alone isn’t emotive enough then it’s just a simple matter of determining the freedom you want to take away is harmful to children, and this is where many arguments in favour of regulating the internet start. Also likely to make an early appearance are ‘but’ phrases such as ‘the internet offers many benefits but…’ or ‘freedom of speech is important but it comes with responsibilities.’

The Ofcom discussion document is no different, but (you see, it’s easily done) it does appear to aspire to some degree of balance and thoroughness. After the standard preamble about how children need to be protected from horridness online (which is hard to disagree with, the question is how), it notes that regular broadcast TV is a lot more regulated than online platforms like YouTube.

Ofcom broadcast regulation table

The stuff about the BBC is irrelevant as it’s tax-funded and thus subject to a unique level of state interference. Ofcom gets to keep an eye on other broadcaster’s catch-up services but has no role in any other online content. IT reckons other online press is regulated by IPSO, which is not even approved as a regulator, and IMPRESS, which is not supported by the press. We can assure you that Telecoms.com has had not contact with either, but perhaps we will after this.

Ofcom also laments the different amounts of regulation a piece of video is subject to depending on how it’s consumed. Live TV gets a lot of oversight, catch-up less so and YouTube none right now. The growing impression is that a lot of this is targeted very specifically at YouTube, which also happens to be where children increasingly go to for video.

Ofcom broadcast regulation table 2

The document then moves on to a cherry-picked selection of anecdotes describing positive outcomes of the kind of regulation it seems Ofcom would like to see more of. In the absence of equivalent negative anecdotes, who can Ofcom expect this to be considered evidence in any honest and rigorous sense of the word?

More balance is shown when the document moves onto the challenges of trying to regulate a platform such as YouTube. They include the scale of the platform, the variety of content on it, the fact that much of it is user-generated and the fact that it’s global. There is also a genuine attempt to explore the dichotomy we flagged up at the start of freedom versus security.

“Another relevant principle is the safeguarding of freedom of expression,” says that passage. This means that people are able to share and receive ideas and information without unnecessary interference, such as excessive regulations or restrictions. When the need to protect audiences from harm comes into tension with the need to preserve free expression, the weight that a regulator places on the two aims reflects the priorities set by Parliament, as well as audiences’ evolving attitudes.

“Depending on the weight attributed in an online context, there is a risk that regulation might inadvertently incentivise the excessive or unnecessary removal of content that limits freedom of speech and audience choice. Such concerns have been raised in the context of the new German law.”

“Our experience in regulating broadcasting shows that while balancing audience protection and freedom of expression is not straightforward, it can be done in a way that is transparent, principles based and fair. Applying this to an online world might translate into greater attention to the processes that platforms employ to identify, assess and address harmful content – as well as to how they handle subsequent appeals.”

A lot of very good points were made by that passage, but the concluding one would seem to fundamentally undermine calls for greater regulation. These platforms (as well as the press) already have loads of processes in place to tackle exactly the harmful stuff Ofcom seems to be worried about. Many would argue YouTube has already gone too far in this respect (albeit mainly to placate advertisers), but in any case doesn’t that render calls for regulation redundant?

Another part of this discussion document that seems somewhat self-defeating is the research. You can see the headline data points below, which seems to indicate the majority of the UK is pretty worried about a bunch of stuff online. This in turn would appear to be a clear call to action for Ofcom and the government to intervene in order to reassure and protect the anxious electorate.

Ofcom survey findings

But when you navigate through the supporting documents you can see a very big gulf between spontaneous and ‘prompted’ responses. It is to Ofcom’s credit that it has been so transparent about the findings, but it must also know that the vast majority of media will simply report the headline figures without nuance or caveat. That sounds dangerously close to the kind of ‘fake news’ that everyone claims to be so worried about online.

Ofcom survey findings prompted

Ofcom survey findings prompted 2

It’s right that Ofcom should take the lead in initiating a (somewhat belated) public discussion on how the wild west of the internet should be approached. But it’s hard to escape the impression that its desired outcome will be new powers and laws that restrict online activity in the name of shielding our delicate, innocent eyes and ears from ‘harm’. If the internet is all about greater choice then shouldn’t we be trusted to decide for ourselves what’s in our own best interests?